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"Trustees are also obliged to keep the BOR up to date or will be liable, on summary conviction, to a class A fine (up to €5,000)."

Calling all Irish trustees - are you complying with new beneficial ownership legislation?

06 Mar 2019

In accordance with the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019, trustees of express Irish trusts are under a new obligation to establish and maintain registers of beneficial ownership with immediate effect.

The legislation came into force on 29th January 2019 and applies to express trusts whose trustees are resident in Ireland or trusts which are otherwise administered in Ireland.

It transposes into Irish law the obligations imposed on EU member states by 4MLD as amended by 5MLD, regarding the beneficial ownership of certain Irish trusts and the maintenance of a beneficial ownership register (BOR) detailing the trust's beneficial owner (BO) and the steps taken to arrive at that conclusion. Trustees are also obliged to keep the BOR up to date or will be liable, on summary conviction, to a class A fine (up to €5,000).

Trusts in scope

Although 'express trusts' are not defined by the legislation, in Irish law an express trust is generally one which must have certainty of words, certainty of subject matter and certainty of objects. Trusts within scope are:

  • Bare trusts
  • Nominee express trusts
  • Charitable trusts (used regularly in the aircraft leasing sector in Ireland)
  • Foreign trusts which are administered in Ireland
  • Pension fund trusts
  • A trust that is a collective investment undertaking (in this case, a reference to the trustee includes the manager or operator of the collective investment undertaking).

In accordance with 5MLD, the BO information should cover all express trusts in the register and not just those trusts that generate tax consequences. (We detail 5MLD's implications here.)

Identifying the 'beneficial owner'

4MLD defines a BO of a trust as "any natural person(s) who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted and includes at least:

  • the settlor;
  • the trustee(s);
  • the protector, if any;
  • the beneficiaries, or where the individuals benefiting from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates;
  • any other natural person exercising control over the trust by means of direct or indirect ownership or by other means"

Trustee obligations

The trustee must comply immediately, recording, retaining and keeping accurate the following information on the BOR as well as recording the steps taken to identify the BO:

  • The name, date of birth, nationality and residential address of each BO of the trust.
  • The date on which each natural person was entered into the register as a BO of the trust.
  • The date on which each natural person who has ceased to be a BO of the trust ceased to be such an owner.

Trustees must keep these records for a period of no less than five years after the date that the final distribution under the trust is made, arranging for their deletion after that. The trustee BO information can also be exchanged with other EU competent authorities.

Unlike the BO regulations for Companies, there is no requirement for trustees to issue notices to the relevant parties associated with the trust. There is also no obligation on the BOs to provide information on the trustee.

However, trustees who are engaging with "designated persons" (e.g. Revenue Commissioners, Central Bank of Ireland, accountants, solicitors) must:

  • inform the designated person that they are a trustee;
  • on request provide information identifying all the BOs of the trust; and
  • notify the designated person of any change in such information.

Next steps

The Registrar of Companies is expected to set up the Irish central register where this information is to be stored and accessed from before 4MLD's EU wide deadline of March 2020.

Implications

The legislation makes the ownership of trusts more transparent. Although there is no transitional period, express trusts tend to be used in financing transactions where beneficial ownership is already available or easy to ascertain, therefore the immediate requirement imposed should not prove difficult in most cases.

However, the scope of the legislation is broad and the process of informing designated persons and logging actions can be time-consuming. This may lead trustees to outsource these requirements.

How can we assist you?

As an expert corporate services and company secretarial provider, Ocorian is adhering to the new legislation and has already identified all the BO of trusts internally. We can provide administration services that streamline the process, including advising on:

  • What steps are needed to identify the BOs of express trusts.
  • Creating the internal "express trust (beneficial ownership) register".
  • Filing the registers with the CRO within the required timeframe.
  • Keeping up to date with MLD and equivalent for any new requirements.
  • Make filings on your behalf if there is a change in ownership.

We also provide a full suite of company secretarial and reporting services which you can find here.

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